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Business Jets Market Remains Strong Despite Economic Uncertainty

Planemakers Showcase New Models at NBAA-BACE

The world’s largest corporate aircraft show, the National Business Aviation Association’s (NBAA) annual Business Aviation Convention & Exhibition (BACE), opened on Tuesday in Las Vegas. The event features the latest models and innovations from leading planemakers such as Bombardier, Textron, Embraer and Boeing.

Some of the highlights of the show include:

  • Textron unveiled its newest Cessna Citation CJ3 Gen2 business jet, which offers improved performance, comfort and connectivity.
  • Embraer launched its Phenom 100EX business jet, an upgraded version of its popular Phenom 100 series, with enhanced avionics, cabin and engines.
  • Bombardier announced the progress of its Global 8000 aircraft, which it claims will be the world’s fastest business jet, capable of flying at Mach 0.925.
  • Boeing showcased its BBJ family of airplanes, which offer spacious and luxurious interiors, long-range capabilities and advanced technologies.

The planemakers expressed optimism about the demand for business jets, especially in emerging markets such as Asia and Latin America, where the wealthy are seeking more convenience and privacy in their travel.

Analysts Warn of Potential Risks to Private Aviation

While the planemakers are betting on steady demand for business jets, some analysts are turning cautious about the appetite for private flying due to growing macroeconomic risks and a fading pandemic-induced boom.

Business Jets Market Remains Strong Despite Economic Uncertainty

Private aviation witnessed a surge during the pandemic, both in users and buyers, as the wealthy took control of their travel due to public health concerns. Although those concerns have faded and commercial air service on key routes has resumed, industry executives have said they don’t see demand slowing.

But Wall Street is turning cautious. “If the Israel-Hamas situation worsens, oil prices spike up and the economy slows down. That could be a factor affecting demand,” TD Cowen analyst Cai von Rumohr said. “It is a cyclical business after all.”

Other factors that could dampen the outlook for business jets include persistent supply-chain snags, high interest rates, an uncertain economic picture and escalating geopolitical tensions amid the military conflict in the Middle East.

Honeywell Forecasts Growth in New Business Jet Deliveries

On Sunday, engine maker Honeywell estimated a 10% growth in new business jet deliveries in 2024 and joined several planemakers in emphasizing the strength of global demand for new business jets.

Honeywell said it expects 7,300 new business jet deliveries worth $235 billion from 2024 to 2033, up from its previous forecast of 7,100 deliveries worth $217 billion from 2023 to 2032.

Honeywell attributed the increase to the recovery of the global economy from the pandemic, the expansion of fractional ownership and charter services, and the introduction of new models with better performance and features.

Honeywell also said it expects the market will eventually settle at levels that are structurally around 15% higher than pre-COVID levels.

As a pure-play business jet provider with financial leverage, Bombardier is most exposed to any weakness in demand, followed by Textron, J.P.Morgan analyst Seth Seifman said in a note.

Manufacturers are expected to continue reporting robust backlogs and book-to-bill ratios above 1.00, though likely not as strong as those seen 12 to 18 months ago, said Adam Cowburn, managing director at Alton Aviation Consultancy.

The book-to-bill ratio is an indication of future demand and a ratio of over 1 is considered healthy.

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